Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

Wisdomtree Japan Hedged Eq / Technical Analysis

Market dynamics continue to send mixed signals, but the bottom line is that not one MSCI ACWI Sector is breaking down, and important price support levels are holding in the US, Europe, and Japan. Additionally, the MSCI ACWI, ACWI ex-US, and EAFE indexes all remain above critical support levels. Until supports start to break we cannot be bearish. It is also worth noting that various indicators could be making a turn for the better, including early signs of interest rates bottoming in the US and Germany, a potential false breakdown in crude oil, and high yield spreads leveling-out.

Market dynamics continue to send mixed signals, but the bottom line is that not one MSCI ACWI Sector is breaking down, and important price support levels are holding in the US, Europe, and Japan. Additionally, the MSCI ACWI, ACWI ex-US, and EAFE indexes all remain above critical support levels. Until supports start to break we cannot be bearish. It is also worth noting that various indicators could be making a turn for the better, including early signs of interest rates bottoming in the US and Germany, a potential false breakdown in crude oil, and high yield spreads leveling-out.

Critical Supports Holding in the US, Europe, & Japan; Buying Health Care, Utilities, Materials, Tech

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Last Week in Event SPACE:  Swire, Hitachi Metal, Jardine, Softbank, Bingo, Japan Asia, Mainstream

Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

<div>JPX-Nikkei 400 is composed of common stocks listed in the First Section, Second Section, MOTHERS Market, and the JASDAQ Market of the Tokyo Stock Exchange. This is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents that are selected based on several factors including market capitalization, trading value, operating profits, and ROE.</div><div>A periodic review will be conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. This review will be conducted using the final business day of June as the base date. </div><div>Quiddity provides quantitative research on pre-event basket strategies surrounding this Index Rebalance event. Below is a discussion on the latest adjustments required for the basket portfolio for the 2021 Rebalance based on April-end data. </div>

JPX-Nikkei 400 is composed of common stocks listed in the First Section, Second Section, MOTHERS Market, and the JASDAQ Market of the Tokyo Stock Exchange. This is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents that are selected based on several factors including market capitalization, trading value, operating profits, and ROE.A periodic review will be conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. This review will be conducted using the final business day of June as the base date. Quiddity provides quantitative research on pre-event basket strategies surrounding this Index Rebalance event. Below is a discussion on the latest adjustments required for the basket portfolio for the 2021 Rebalance based on April-end data. 

JPX-Nikkei 400 Rebalance 2021: Pre-Event Basket Adjustments for April-End

Medical & Biological Laboratories / Event-Driven

On 27th October 2020, <a href="https://www.smartkarma.com/entities/jsr-corp" target="_blank" data-smartkarma-citation="entities:17620:1" rel="noopener">JSR Corp (4185 JP)</a> ("JSR") announced a <a href="https://ssl4.eir-parts.net/doc/4557/tdnet/1892862/00.pdf" target="_blank" rel="noopener">Tender Offer</a> to acquire the remaining shares in its 50.8%-owned subsidiary <a href="https://www.smartkarma.com/entities/medical-biological-labs-co" target="_blank" data-smartkarma-citation="entities:12811:1" rel="noopener">Medical &amp; Biological Labs Co (4557 JP)</a> ("MBL") in an all-cash Deal that valued the company at a market cap of ~¥ 23bn (US$218mn). The Offer Price was ¥4400/share in cash. MBL was founded in 1969 as the first manufacturer of antibodies in Japan. Having evolved over time, the company now offers clinical diagnostics and research reagents designed for analysis of proteins and/or genes associated primarily with autoimmune disorders, cancer, gynecological diseases, and infectious diseases. Most importantly, MBL also develops substances that could be used in COVID-19 research and has other COVID-19 related products in its product portfolio such as PCR kits for detecting new coronavirus, Antibody test kits for checking infection history, and Gene extraction kits to extract RNA samples from the upper respiratory tract samples (nasopharyngeal swab samples).Previously, I covered this Deal in <a href="https://www.smartkarma.com/insights/jsr-4185-jp-tender-offer-for-medical-biological-labs-4557-jp" target="_blank" data-smartkarma-citation="insights:44617" rel="noopener">JSR (4185 JP) Tender Offer for Medical &amp; Biological Labs (4557 JP)</a>. The Offer came at a premium of 23.8% to the undisturbed price and was below the mid-points of the DCF and Peer Comp Valuation ranges suggested by the Acquirer Advisor. On the other hand, according to Target Advisor's forecasts, the Offer Price translated to EV/Rev and EV/EBITDA multiples of 2.1x, and 9.2x respectively 2021E. Furthermore, the offer was opportunistically timed when MBL's EV/EBITDA (LTM) multiple was close to its 3-year low. Considering these facts and that the company's financial performance could directly benefit from COVID-19 driven demand for testing and research, the Offer Price seemed light. Regardless of the lightness of the Offer, I concluded "there might be enough friendly shareholders to get this Deal over line" and that is what has happened. On Friday after market close, on the day following the end of the Tender Offer Period, both the Acquirer (<a href="https://ssl4.eir-parts.net/doc/4185/tdnet/1912460/00.pdf" target="_blank" rel="noopener">J-only</a>) and the Target (<a href="https://ssl4.eir-parts.net/doc/4557/tdnet/1912400/00.pdf" target="_blank" rel="noopener">J-only</a>) provided updates on the Transaction. What next? Read on.

On 27th October 2020, JSR Corp (4185 JP) ("JSR") announced a Tender Offer to acquire the remaining shares in its 50.8%-owned subsidiary Medical &amp; Biological Labs Co (4557 JP) ("MBL") in an all-cash Deal that valued the company at a market cap of ~¥ 23bn (US$218mn). The Offer Price was ¥4400/share in cash. MBL was founded in 1969 as the first manufacturer of antibodies in Japan. Having evolved over time, the company now offers clinical diagnostics and research reagents designed for analysis of proteins and/or genes associated primarily with autoimmune disorders, cancer, gynecological diseases, and infectious diseases. Most importantly, MBL also develops substances that could be used in COVID-19 research and has other COVID-19 related products in its product portfolio such as PCR kits for detecting new coronavirus, Antibody test kits for checking infection history, and Gene extraction kits to extract RNA samples from the upper respiratory tract samples (nasopharyngeal swab samples).Previously, I covered this Deal in JSR (4185 JP) Tender Offer for Medical &amp; Biological Labs (4557 JP). The Offer came at a premium of 23.8% to the undisturbed price and was below the mid-points of the DCF and Peer Comp Valuation ranges suggested by the Acquirer Advisor. On the other hand, according to Target Advisor's forecasts, the Offer Price translated to EV/Rev and EV/EBITDA multiples of 2.1x, and 9.2x respectively 2021E. Furthermore, the offer was opportunistically timed when MBL's EV/EBITDA (LTM) multiple was close to its 3-year low. Considering these facts and that the company's financial performance could directly benefit from COVID-19 driven demand for testing and research, the Offer Price seemed light. Regardless of the lightness of the Offer, I concluded "there might be enough friendly shareholders to get this Deal over line" and that is what has happened. On Friday after market close, on the day following the end of the Tender Offer Period, both the Acquirer (J-only) and the Target (J-only) provided updates on the Transaction. What next? Read on.

JSR Deal Tender Results for MBL (4557 JP) Imply Faster Squeeze-Out

Today after market-close, <a href="https://www.smartkarma.com/entities/jsr-corp" target="_blank" data-smartkarma-citation="entities:17620:1" rel="noopener">JSR Corp (4185 JP)</a> ("JSR") announced a <a href="https://ssl4.eir-parts.net/doc/4557/tdnet/1892862/00.pdf" target="_blank" rel="noopener">Tender Offer</a> to acquire the remaining shares in its 50.8%-owned subsidiary <a href="https://www.smartkarma.com/entities/medical-biological-labs-co" target="_blank" data-smartkarma-citation="entities:12811:1" rel="noopener">Medical &amp; Biological Labs Co (4557 JP)</a> ("MBL").MBL specializes in clinical diagnostics and research reagents and has recently added COVID-19 research/testing-related products to its portfolio. The Offer Price would be ¥4400/share in cash which translates to a deal size of ¥11.2bn (~US$107mn). The Tender Offer Period will be from 28th Oct-2020 to 10th Dec-2020. The Deal has a minimum acceptance condition which requires the Acquirer to reach two-thirds control.More below the fold.

Today after market-close, JSR Corp (4185 JP) ("JSR") announced a Tender Offer to acquire the remaining shares in its 50.8%-owned subsidiary Medical &amp; Biological Labs Co (4557 JP) ("MBL").MBL specializes in clinical diagnostics and research reagents and has recently added COVID-19 research/testing-related products to its portfolio. The Offer Price would be ¥4400/share in cash which translates to a deal size of ¥11.2bn (~US$107mn). The Tender Offer Period will be from 28th Oct-2020 to 10th Dec-2020. The Deal has a minimum acceptance condition which requires the Acquirer to reach two-thirds control.More below the fold. 

JSR (4185 JP) Tender Offer for Medical & Biological Labs (4557 JP)

Japan

JSR Corporation manufactures synthetic rubber and synthetic resins.  The Company's rubber products are used mainly for auto tires.  JSR Corporation also manufactures LCD-related materials and photo-resists.

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JSR Corp (4185 JP)

Critical Supports Holding in the US, Europe, & Japan; Buying Health Care, Utilities, Materials, Tech

Various indicators are making a turn for the better, including early signs of interest rates bottoming in the US and Germany, a false breakdown in...

Vermilion Research

Last Week in Event SPACE: Swire, Hitachi Metal, Jardine, Softbank, Bingo, Japan Asia, Mainstream

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

JPX-Nikkei 400 Rebalance 2021: Pre-Event Basket Adjustments for April-End

JPX Nikkei 400 2021 Rebal Pre-Event L/S Basket +2.9% in April (thru the 28th). The 30th is rebal day for readers. 2 potential deletes and 7...

Janaghan Jeyakumar, CFA

JSR Deal Tender Results for MBL (4557 JP) Imply Faster Squeeze-Out

The JSR (4185) deal for (MBL) got 92+%. That leaves a roughly riskless Rate Of Return Residual Trade for the next 3 months.

Janaghan Jeyakumar, CFA

JSR (4185 JP) Tender Offer for Medical & Biological Labs (4557 JP)

JSR (4185) launches a deal to buy in minorities in Medical & Biological Labs (4557 JP), a medical research, diagnostics, and reagent business. The...

Janaghan Jeyakumar, CFA

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